Strategic Management in Contemporary Organisations - Essay Example

Student number: Students Name: Date Submitted: Campus: Lecture time: Lecturer: Tutor: Tutorial Time: STRATEGIC MANAGEMENT IN CONTEMPORARY ORGANISATIONS Introduction Strategic management refers to the formulation, implementation, evaluation and control of strategy in an organisation in order to realize the organisation's strategic intentions. Policy, in this case, refers to an organisations means of gaining competitive advantage. For instance in our case studies 1-10, we can see how the companies employ a strategy to gain competitive advantage. For example Facebook realized that individuals would pay extra to access an extraordinary platform for communication, and since Facebook had the ability to create the extraordinary platform, they put together their knowledge and resources in order to take advantage of this. (Eisner 2002) Still in reference to the case studies, it is evident that modern day organisations are using various strategies to the success of their organisations. It is through strategic management that organisations in the modern day can analyze the path that the organisation is taking to, check on their progress, analyze their chances of success, and develop significant methods alluding to the success of the organisation. (Drejer 2002) Strategic management is based on sustainable competitive advantage and is aimed at earning above-average returns in creating values for the company’s stakeholders. An organisation’s leaders must be active and dynamic. (Barney, 1999) This means that they must anticipate change and continually apply the change to various strategies used by the organisations. Successful leaders lead to successful strategic management. They assist the organisation in making strategic decisions, which are involved in finding out the various industries and how competition in the different industries should be undertaken. Theories of strategy There are four approaches to strategy as suggested by Whittington (2001). These are: Classical approach The classical approach is mostly applicable to larger industries that are more stable. It argues that organisations should adopt a rational and deliberate approach to strategy. (Whittington, 2001). This approach is based on maximum profit making and fulfilling the organisations goals and objectives. To formulate strategy, this approach applies rational planning policy such as the PESTLE method. (Mullins, 2007). However this method is limited by its uncertainty of outcome especially in external environments of an organisation. (Wright, 2000). It is therefore not fully effective and can be complemented by Porter’s Five Forces model, to ensure effective analysis of the attractiveness of an organisation in making profits. Evolutionary approach This approach relies on the capability current market to of the market to achieve maximization of profit as a unitary goal. (Einhorn & Hogath 1988 state that growth is nature's cost benefits analysis meaning that an organisation can only depend on the evolution of the market. This means that the outcomes are unknown and unpredictable. (Whittington, 2001). Processual Approach This approach bases its argument on pluralist goal. It looks into getting more than just profit maximization. It seeks to include personnel objectives as part of the organisations goals as well as emphasizing on the bottom-up approach in which strategy emerge from individuals in the organization. (Batamuriza et al., 2006). It is similar to the classical approaches as both rely on the company's microenvironment as the cause of the formulation of strategy. (Batamuriza et al., 2006). Systemic approach It also favors pluralist goals as the outcome of the strategy. It relies on the socio-economic goals as well as the organisation's goals. (Whittington, 2001). The process and outcome of the approach must go hand in hand with the culture of the society. They seek pluralist results that rely on the social context of a company. (Whittington 2001). Process of successful strategic management A successful strategic management process in a contemporary organisation has three stages. This include: Strategy formulation Implementation Evaluation and control Strategy formulation The Porter's generic strategies model can be used to explain how strategies are formulated in details. These strategies are driven by the scope of the market and the source of the competitive advantage. Other generic strategies include the portfolio planning approach that is designed to assist an organisation in making decisions on investing scarce organizational resources among competing business opportunities and the BCG matrix that relates strategy formulation to business opportunity analysis. This is in accordance with the growth of an industry market. Similarly, strategy formulation has various significant steps that must be followed to ensure that an effective strategy is formulated. This include: Mission and objectives of organisation SWOT analysis Generation of alternative strategies Mission and objectives of the organisation: an organisation sets its mission to define the general purpose of the formation of an organisation. It also gives the areas of operation of the organisation. A company without a mission has no goals. The objectives, on the other hand, ensure that the organisations mission is accomplished. A successful organisation must look into the goals and objectives of the organisation. A successful organization does not hesitate to take in new methods of management and strives to create a milestone. Vision provides direction and motivation for an organizational setting of objectives. The Vision creates a bond between the organization and its stakeholders. It ensures that the employees work for a cause more than for a goal. SWOT Analysis: this refers to the strengths, weaknesses, opportunities and threats of an organisation. SWOT analysis determines the strategies in which an organisation should employ for it to be successful. Changes in an organisations environment bring about new opportunities and new methods of achieving an organisations strategies. Similarly, threats may arise in an organisation, which means that the organisation has to be alert in ensuring they can solve threats that arise. The leaders of a business need cognizance and indulgent of the external functional setting of their businesses in order to bring into line their organizational planning methods and also as per to the external environment conditions. With this kind of environment, the market of an organisation can be firmly adjusted. Several enterprising methods have been documented by means of adaptive measures. Alternative strategies: After identifying an organisation's mission, vision and SWOT analysis, it is important for an organisation to seek alternative strategies for achieving the company's goals and objectives. Various strategies can be applied to fulfill one objective. This ensures that in case on strategy fails; the others can stand in for the failed one, ensuring that an organisation does not completely fail in its strategic processes. It also enables an organisation to ensure that it adopts the correct strategy and that it can successfully evaluate the strategic options. Implementation A successful strategic management requires successful implementation. An organisation may require transcending the different concepts of strategy for instance policy making, information following, and resource allocation. The implementation ensures proper strategic application and organizational designs. It ensures that effective means are established, in favoring the organizational management, suppliers, manufacturers, customers and other stakeholders in the organisation. Implementation also deals with changing an organisation's strategies into actions. These actions are expected to bring in good results. It also involves the application of the functions of management, these are planning, organizing, staffing, leading, and controlling. Functional areas in the organisation such as marketing, production, human resource and information department express the organisations policy into functional strategies in this process. It identifies the needed resources and also checks in the allocation of the resources as required. Evaluation and control This is the final step in the process. It examines the implementation of the strategic management process. It checks whether the process has achieved all its objectives. It also takes the necessary measures in making sure the process runs smoothly. It checks on the effectiveness of the strategies and changes those strategies that seem to have a problem. An organisation ought to continue monitoring the implementation of the strategy to allow subsequent changes. The results of the strategy are measures and evaluated according to the organisation's objectives. Adjustments may be made according to how these objectives are fuilfiled. It is important to note that the strategic process is dynamic and continuous. If one step changes, then, the entire process is also bound to change. This means that the process must be frequently repeated to ensure that it automatically adopts to the environment of the organisation, hence giving desired results. Competitive Advantage. Competitive advantage is defines as the ability to create more economic advantages more that your competitors or potential competitors. Competitive advantage is the expected result the strategic management process. For an organisation to achieve an effective competitive advantage, it must follow various steps. First and foremost, the organisation must have a unique management process. It must have different offerings, strategies and goals from those of their competitors. Similarities in structure and performance of different organisations lead to lack of competitive advantage Competitive advantage only results if an organisation adapts doing their things in a different and better way than that of their competitors. In this perspective, there are two types of competitive advantage. First is the Preference for the organisation's output, whereby individual customers choose the firm's output over the output of other organisations. Here, clients are more than willing to pay extra costs to gain the output from the particular organisation. The second advantage is cost advantage. An organisation may attract customers due to its effective, affordable and reasonable prices as compared to those of opponents. Clients sought these organisations for their cheap pricing units. A successful organisation should identify and exploit the various methods that may bring maximum competitive advantage to the organisation. Well, thought out competitive advantages result in high organizational profits, as they attract healthy competition. Opponents ensure that they event strategies that assist them to imitate the advantage of other organisations. Some even offer better offers to overtake the advantage of others. For instance and organisation may even opt to participate in corporate social responsibilities. CSR refers to the interaction between an organisation and the social environment in which it exists. (Bowen 1993). Challenges facing strategic management in contemporary organisations An organisation applies Strategic management to achieve its objectives and missions. This means that if an organisation does not apply realistic objectives, missions or visions, then the strategic management process cannot be fuilfiled accordingly. A problem with the objectives or the missions of an organisation automatically limits the strategy. Some tasks in the strategic process are also difficult and tedious. This requires professionals and experts to implement the process. It requires people with vision and objectives that are in line with those of the company. Lack of proper implementation leads to failure of the strategic management process. This means that an organisation has to be very keen in the implementation of the strategies. Conclusion Extensive research on what makes successful organizations has constantly been performed. According to our case studies, several traits of a successful organisation can be retrieved. A successful organisation is sensitivity to its business environment. It shows the ability to learn and adjust its business environment; it ensures Unity and identity in building a community with character, idea, and purpose. It has a high level of acceptance and delegation enabling constant ability to shape relationships. It is well known for Conventional financing, avoiding any kind of squander or embezzling. Such an organisation is known as a live company bearing in mind that it can preserve itself. It focuses more on knowledge rather than finance and sees itself as having a potential to become even more successful. Ansoff laid the basis of the usefulness of strategic planning. Therefore, strategic planning organisations in must be incorporated with enough comprehension and understanding of the external environments. (Ansoff 2002). This is because every organisation has a dynamic and unique external environment. This means that only indulging with the external environment examination and analysis can assist in raising the efficiency and productivity of organisation, as well as effective planning in smaller enterprises It is for this reason that all the concepts of strategic management should be adopted by any organisation that strives to be successful. Other minor concepts that may be considered to an organizations success are facts like Core Competencies to indicate organization’s best capabilities, distinctive Competencies to show case unique capabilities, Critical Success Factors and Leadership Competencies showing leadership characteristics in managers and employees and Core Values to imply shared values of the organisation. A company’s position in the industrial market and economic circumstances in its surrounding also affects its development. With the changing trends in technology, market and opportunities, the organizations have managed their core values. This have encouraged the organizations stakeholders to build a lasting organisation. References Barney, J.B., 2010. Strategic Management and Competitive Advantage. 3rd Ed. Boston: Prentice Hall Bartkus B, Glassman m,& McAfee (2000) Mission statements are they smoke and mirrors, Business horizons, Nov./Dec Drejer, A. (2002). Strategic management and core competencies. Westport, Conn.: Quorum Books. Ghamari, J. (n.d.). Conceptualization of Competitive Advantage and Sustainable Competitive Advantage, the Question of Diversity. SSRN Journal. Hofer, C. and Schendel, D. (1978). Strategy formulation. St. Paul: West Pub. Co. K Burke, M O’Sullivan & J Wright, ‘Qantas dispute heads to umpire, more pain possible, Sydney Morning Herald, 22 November 2011. Kotter, P.J. (1982), the General Manager. New York: Collier McMillan. Mintzberg, H. (2005) ‘Five Ps for Strategy' (ed.) Strategy bites back, Harlow, FT Prentice. Phillips, C., Doole, I. and Lowe, R. (1994). International marketing strategy. 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